7 U.S.C. § 1946 — Liability of borrower

(a) Determination of interest rates (1) The Secretary must make all loans under this subchapter upon the full personal liability of the borrower and upon such security as the Secretary may prescribe. The interest rates on such loans, except for guaranteed loans and loans as provided in paragraphs (2) and (3), 1 is as determined by the Secretary, but not in excess of the current average market yield on outstanding marketable obligations of the United States with remaining periods to maturity comparable to the average maturities of such loans, plus an additional charge not to exceed 1 per centum as determined by the Secretary, which charge is deposited in the Rural Development Insurance Fund or the Agricultural Credit Insurance Fund, as appropriate, and adjusted to the nearest one-eighth of 1 per centum. The interest rate on any guaranteed loan made under this subchapter is such rate as may be agreed upon by the borrower and lender, but not in excess of a rate as may be determined by the Secretary. (2) The interest rate on a microloan to a beginning farmer or rancher or veteran farmer or rancher (as defined in section 2279(e) of this title), or any loan (other than a guaranteed loan) to a low income, limited resource borrower under this subchapter must not be— (A) greater than the sum of— (i) an amount that does not exceed one-half of the current average market yield on outstanding marketable obligations of the United States with maturities of 5 years; and (ii) an amount not exceeding 1 percent per year, as the Secretary determines is appropriate; or (B) less than 5 percent per year. (b) Payment period; consolidation and rescheduling of loans Loans made under this subchapter is payable in not to exceed seven years. The Secretary may consolidate or reschedule outstanding loans for payment over a period not to exceed seven years (or, in the case of loans for farm operating purposes, fifteen years) from the date of such consolidation or rescheduling, and the amount of unpaid principal and interest of the prior loans so consolidated or rescheduled must not create a new charge against any loan levels authorized by law. A new loan may be included in a consolidation. Such new loan is charged against any loan level authorized by law. Except as otherwise provided for farm loans under section 1981b of this title , the interest rate on such consolidated or rescheduled loans, other than guaranteed loans, may be changed by the Secretary to a rate not to exceed the rate being charged for loans made under this subchapter at the time of the consolidation or rescheduling. The interest rate on any guaranteed loan under this subchapter that may be consolidated or rescheduled for payment is such rate as may be agreed upon by the borrower and the lender, but not in excess of a rate as may be determined by the Secretary. (c) Line-of-credit loans (1) In general A loan made or guaranteed by the Secretary under this subchapter may be in the form of a line-of-credit loan. (2) Term A line-of-credit loan under paragraph (1) must terminate not later than 5 years after the date that the loan is made or guaranteed. (3) Eligibility For purposes of determining eligibility for a farm operating loan under this subchapter, each year during which a farmer or rancher takes an advance or draws on a line-of-credit loan the farmer or rancher is considered to have received an operating loan for 1 year. (4) Termination of delinquent loans If a borrower does not pay an installment on a line-of-credit loan on schedule, the borrower may not take an advance or draw on the line-of-credit, unless the Secretary determines that— (A) the borrower’s failure to pay on schedule was due to unusual conditions that the borrower could not control; and (B) the borrower will reduce the line-of-credit balance to the scheduled level at the end of— (i) the production cycle; or (ii) the marketing of the borrower’s agricultural products. (5) Agricultural commodities A line-of-credit loan may be used to finance the production or marketing of an agricultural commodity that— (A) is eligible for a price support program of the Department of Agriculture; or (B) was eligible for a price support program of the Department of Agriculture on the day before April 4, 1996 .